Indian Financial Services Sector has Huge Potential for Global Players

Horasis: The Global Business Community hosted the Global India Business Meeting in Naples on 26-27th of June 2011 at Hotel Royal Continental. Over 400 Global Industrial leaders met under the theme “Globalizing Indian Firms”. Mr. R. Seetharaman, Doha Bank Group CEO participated in the Panel discussion “Financial Services: The view from India” on 27th June 2011.

Speaking on the Occasion Mr. Seetharaman gave his outlook on Indian Economy. He stated that “Indian Economy grew at 7.8% in the 1st quarter of 2011 and is expected to grow between 8-9% in 2011. In June 2011, the Reserve Bank of India raised interest rates on account of higher inflation which has currently exceeded 9%. In Nov 2010 G20 meeting an agreement was reached wherein India will be one of the 10 largest members in IMF. Indian rupee has got a new unique symbol in 2010. UN estimates India would contribute a quarter of addition to world’s workforce over next 10 years.”

Mr. Seetharaman gave his view on regulations for presence of foreign banks in India. He stated that” The budget of 2011-12 has plans to give Bank licenses to new players. Rabbo bank has received banking license in April 2011, Industrial and Commercial Bank of China (ICBC) has recently granted a business license for branch in India in May 2011. Major MNC banks and Indian players are also considering full fledged banking operations in India. According to Price Waterhouse Coopers (PWC), Banking assets of emerging nations are likely to overtake that of G7 economies by the year 2050, with India likely to emerge as the third largest domestic banking market in the world in the next three decades. With an encouraging regulatory framework in a growing economy Global and Indian players should strive to obtain new licenses and also expand on new products in the coming years”

Mr. Seetharaman gave his outlook on products and services for foreign banks seeking presence in India.” India is a huge as well as a growing economy, hence it gives ample scope for foreign banks across various segments. Industrial growth is expected to expand in the coming years. Trade of India with other foreign countries shows an upward trend. Sectors such as infrastructure has immense scope. Hence there is potential for both funded and non-funded facilities in India. However the challenge is to determine pricing of products based on inflation trends. India has a rising middle class population and with developments in Global retailing ,the potential for retail products are immense. Indian retail customers are more tech – savvy and constant innovation is needed to understand their needs. Due to rising foreign trade innovative treasury and forex products can introduced to address customer needs. Derivatives and structured products can also be designed to suit customer needs.”

Mr. Seetharaman highlighted on foreign banks seeking opportunities in Indian financial markets.” The Long term fundamentals of Indian economy are sound which encourages both Institutional and retail investors to enter the Indian Capital market through various routes. The current budget also encourages Foreign Institutional Investors (FIIs) to invest in mutual fund schemes and will lead to lot more integration of markets. Foreign investment also received encouragement with the recent budget increasing foreign institutional investment (FII) limit in corporate infrastructure bonds by $20 billion to $40 billion. Private Banking / Wealth management solutions have good potential in India“

Mr. Seetharaman gave his opinion on current financial services trend in India” Mobile banking was largely untapped. An estimated 775 million people are mobile phone subscribers. Just five percent of mobile phone subscribers are registered for the service and of them, a tiny 0.5 percent use it regularly. Global Pension funds are increasing exposure to India IPO market and secondary market in India. Indian Pension funds can also participate and act as counterbalance to volatile investments by FII’s. In May 2011 Bombay Stock Exchange (BSE) and NSE has been granted an ‘in-principle’ approval by the capital market watchdog SEBI to launch an exchange exclusively for small and medium enterprises (SMEs).This platform fits well with the government’s objective of taking all types of financial services to the masses. ”

Mr. Seetharaman gave his outlook on Private equity trends in India” The funds which have participated in India-related private equity deals are valued at $2.1 billion in the year so far, surpassing the previous record of $1.9 billion in investments in all of 2007. The major deals include includes Apax Partners and IGate Corp who bought a majority stake in Patni Computer Systems Ltd. for $1.22 billion, Bain Capital and the Government of Singapore Investment Corporation assisted in the $838.59 million buyout of Honda Motor Co. Ltd’s 26% stake in the Joint venture Hero Honda. India’s food and agriculture sector and Hospitality provides opportunities in private equity segment. “

In his concluding remarks, Mr. Seetharaman said that “In the coming years Indian financial services sector has huge potential for Global players”